Apple's Intel PCs to run Windows

Boot Camp release to work with newest Macs

SAN FRANCISCO (MarketWatch) -- Apple Computer Inc. shares climbed almost 10% Wednesday after the company unveiled software that will let its newest Macintosh computers run Microsoft Corp.'s Windows operating system, a watershed decision that may help boost its share of the PC market.

Apple
AAPL, +1.80%
surged $6.04 to close at $67.21 on optimism that the move will broaden the Mac's appeal, not only among consumers but also among business users.

The new software product, called Boot Camp, allows users of Macintosh machines that run on Intel Corp.-made chips to choose between Apple's own operating system and Windows XP to run their PCs.

It's the first time in more than a decade that Apple has released a product that lets its computers run Windows, the most widely used PC operating system by far. Making its new Intel-based Macs compatible with Microsoft's
MSFT, +1.16%
software could help Apple expand its single-digit share of the PC market.

"This is another step in Apple's efforts to expand its total addressable market to include a more mainstream audience," Goldman Sachs analyst Rick Sherlund wrote in a note to clients. Sherlund rates Apple shares attractive.

Apple's PC sales are growing faster than the overall market, thanks in part to the firm's wildly popular iPod music players, which are drawing multitudes into Apple retail stores.

For the quarter ended in December, Mac sales climbed 20% from the prior year to 1.25 million units. According to research firm IDC, the worldwide PC market grew 16.4% in 2005, while shipments in the U.S. market rose by 10%.

"The ability to boot Windows XP removes one of the key obstacles to Apple taking a significantly larger share of the PC market," said Steve Lidberg of Pacific Crest Securities. "Many third-party applications run only on Windows, (and) these programs should now work on a Mac."

Cupertino, Calif.-based Apple said that a trial version of the software would be available as a free download from the company's Web site beginning Wednesday. A full version of the program also will be incorporated into the next upgrade of Apple's Mac OS X operating system, called Leopard, expected in the second half of the year, according to the company.

Attracting 'switchers'

The potential for Apple to boost market share through what the company calls "switchers" -- people who move from a Windows-based PC to a Mac -- has some analysts viewing Apple's move as one of its most important business steps since the launch of the first iPod in 2001.

'We believe this is a big deal and potentially could be a significant game-changer.'
Shaw Wu, American Technology Research

"A key reason why Apple hasn't gotten more 'switchers' is likely due to a lack of strong Windows compatibility," said Shaw Wu, of American Technology Research. "We believe this is a big deal and potentially could be a significant game-changer."

The software will only work in Apple PCs that run on chips made by Intel Corp.
INTC, +0.14%
Apple began shipping its first Intel-based Macs in January and has said previously that all of its computers will run on Intel chips by the end of this year.

An Apple executive said the switch to Intel chips provided some of the impetus for Boot Camp.

U.S. PC-market share: full year 2005

Company

Market share

Dell

33.5%

H-P

19.4%

Gateway

6.1%

Apple

4%

Toshiba

3.5%

Lenovo

3.2%

Others

30.2%

"We felt there were some people who wanted to switch to a Mac, but they needed some critical application that wasn't available on the Mac," said Phil Schiller, Apple's senior vice president of worldwide product marketing. "Then there are others who feel they need the safety net of Windows."

Many industry observers -- not to mention legions of loyal Mac users -- consider the latest version of Apple's operating system easier to use and more robust than Windows XP.

Perhaps with that in mind, Schiller emphasized that Apple won't be selling or supporting the Windows operating system.

Not Virtual PC

Boot Camp is different from Virtual PC, a program owned by Microsoft that allows Mac users to run Windows simultaneously with the Mac OS, Schiller added.

That configuration forces the two operating systems to compete for access to software applications and printing software, slowing down Macintosh performance, according to Schiller.

Schiller didn't say if there would be future updates to Boot Camp or whether the software would allow Mac computers to run Vista, Microsoft's next upgrade of the Windows operating system that's set for release to business users in November and to consumers in January 2007.

While Boot Camp may be Apple's strongest push yet to win over Windows customers, it isn't the first time the company has officially put out a product to allow the software to run its PCs.

Apple's Schiller said that more than a dozen years ago, the Mac maker released a PC-compatibility card that a person could plug into a Macintosh and run Microsoft DOS and early versions of Windows. That product was phased out after weak market acceptance.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.